Personal Cap-and-Trade

Tax the greedy, help the needy, and motivate conservation across the economy.

Human behavior has yet to catch up with the reality that resources are finite. There are limits to the planet’s ability to feed and sustain a growing population, and there are limits to the planet’s ability to absorb our pollution. Yet history is a litany of one “great” civilization after another raping its resources and then starving when the resources run out.

Neither population growth nor economic growth can go on forever. The long term survival of civilization depends on humanity learning to say “enough,” and to learn to live with what we have.

So how do we come up with a fair and just way to regulate and allocate our finite resources for the greatest benefit to society as a whole? That is the fundamental question of economics and of political science.

Unfortunately, most of the world is working under the severely flawed economic system known as free-market capitalism. It assumes that resources are infinite, is driven to consume resources as quickly as possible, and must grow to survive. Long-term survival under such a system is impossible in a finite reality-based world.

The other flaw with free-market capitalism is that nothing is allocated on a basis of need or of merit, but is sold to the highest bidder. So in times of scarcity, the rich are free to consume and waste with abandon, while the poor are forced into deprivation. This is neither fair nor just.

This injustice becomes obvious in times of gasoline shortages. The poor who are dependent on gasoline for their basic needs become impoverished, while the rich continue to burn scarce gasoline as if no shortage existed.

At times of scarcity, free market pundits advocate high prices to force necessary conservation. But high prices crush the poor who are already conserving, and they don’t affect the behavior of the wasteful rich. In a fair and just system, everybody would get their fair share at an affordable price while the wasteful and the greedy would pay dearly.

Such a system may be easy to implement. Under a personal cap-and-trade system for gasoline, every person of driving age would get an equal monthly allotment. This allotment would be nothing more than a right to buy a given amount of gas at current market prices. If your allotment is more than you need, you could sell the excess to someone else who wants more.

This would create a market for gas allotments, but instead of enriching Wall Street or the oil companies, the windfall profits would go to those who conserve resources, and the high prices would be paid by those who are greedy and wasteful. Naysayers may call it a tax, but waste and greed are the right things to tax.

Over-users would be motivated to conserve to avoid spending money on allotments. Conservers would be motivated to conserve more in order to have more allotments to sell. Personal cap-and-trade would inspire a universal conservation ethic, drive innovation, and offer millions of people a new route to prosperity.

Given the need to reduce consumption and to live within our means, such a personal cap-and-trade system would be appropriate for many other resources, such as electricity, water, and even some types of food. Of course, the devil is in the details. Setting and adjusting national and individual allotment levels, establishing eligibility, preventing sharks from gaming the system, and many other important details would need to be sorted out.

But personal cap-and-trade (some would call it rationing) must be open to discussion as a way to live within our means. Our current market-based economy is a failure. It can only lead to a used up planet and ecological armageddon.

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